When it comes to corporate tax reform, the President's Council and Jobs and Competitiveness issued a report today that embraces .... jobs and competitiveness! Indeed, the entire report is solid, accomplishing what the council was formed to do.

Chaired by Jeffrey R. Immelt, Chairman and CEO of GE, and co-chaired by Chairman and CEO Kenneth Chenault of American Express, the panel was formed a year ago to provide President Obama recommendations on policies that could boost economic growth and job creation. Today the commission issued its year-end report, "Road Map to Renewal." Excerpt from the summary:

The report lays out an agenda to Invest in Our Future through education and innovation, Build on Our Strengths in the critical sectors of energy and manufacturing, and Play to Win by making overdue tax and regulatory reforms to stay competitive. Investing in our future, building on our strengths, and playing to win—these are mantras we must adopt, along with the specific policies and initiatives that back them up, if we are going to renew our competitiveness for the century ahead.

The substantive recommendations closely track priorities identified by BRT-member CEOs in such documents as Business Roundtable's "Roadmap for Growth" issued in December 2010 and the "Achieving Smarter Regulation" study released last September. (Everyone's for smarter roadmaps!) On education, innovation, and a comprehensive plan for domestic energy development, the Jobs Council's report hits the right points.

Also striking is the vigorous support the final report gives to corporate tax reform. From its section, "Reform the Outdated Tax System to Enhance American Competitiveness":

There is a growing bipartisan consensus that the country needs comprehensive reform of the corporate income tax. The Council agrees, and supports measures to create a simpler, more efficient tax system that levels the playing field for businesses and makes the U.S. more competitive internationally.

Lower the Tax Rate and Broaden the Base. The Council recommends moving from a corporate tax system with a high rate and a narrow tax base to one with a broader base and a lower tax rate. This would not only enhance economic efficiency but encourage more investment in the U.S. by foreign and domestic companies, boosting economic growth as well as employment.

In a global economy in which capital can move easily across borders, differences in corporate tax rates have a growing influence on where multinational companies decide to invest. Yet while most of our competition has reduced their rates significantly over the past three decades, corporate income taxes in the U.S. have changed very little. Broadening the tax base would simplify the tax code and enable the U.S. to lower the corporate income tax rate to internationally-competitive levels.

A Territorial System of Corporate Taxation. Many Council members agree that the U.S. should shift to a territorial system of taxation in order to make America more competitive in global markets. While most other developed nations have adopted territorial systems that exempt most or all foreign income from taxes when they are repatriated, the U.S. subjects all worldwide earnings to the corporate income tax when they are brought home to the U.S. This approach actually encourages U.S. companies to keep their earnings abroad rather than investing them here at home. Adopting a territorial tax system would bring us in line with our trading partners and would eliminate the so-called “lock-out” effect in the current worldwide system of taxation that discourages repatriation and investment of the foreign earnings of American companies in the U.S.

Exactly so.

Not all council members agreed with the move to a competitive territorial system, raising fears that companies would exploit changes to avoid domestic taxation. At initial glance, those objections look like positioning for the coming political battles. Any comprehenesive corporate tax reform will require careful study and drafting, but the reality is, the U.S.'s current worldwide system of taxation is a competitive disadvantage. The video by the Tax Foundation is a good primer on the issue, and BRT President John Engler testified on our antiquated tax system before a Senate subcommittee last September.

Coverage, commentary...

• Bloomberg, “Obama Jobs Panel Urges Broadened Tax Base, More Oil Drilling”
• Reuters, “Obama jobs panel pushes tax reform, US drilling”
• CNN.com, “Obama council repeats job-creating ideas”
• Statement, Speaker of the House John Boehner, “Speaker Boehner Reacts to President Obama’s Jobs Council Endorsing GOP Approach to Job Creation”